Tunisia at the Crossroads: A Keynesian Moment for Tax Justice - Amine Bouzaiene
In recent years, Tunisia has undergone an unprecedented succession of exogenous shocks. The Covid-19 pandemic, followed by the war in Ukraine, severely strained budgetary balances and accentuated the fragilities of an economy already structurally weakened.
Tunisia’s anchoring in neoliberal policies dates back to the structural adjustment plan adopted in 1986 under the impetus of international financial institutions. The “reforms” that followed consolidated this economic model, at odds with the aspirations of the revolutionary process triggered in December 2010. Yet, successive governments strengthened their collaboration with these same institutions, notably through several IMF programs, thus contributing to the abortion of popular demands. Tunisia therefore finds itself trapped in a vicious circle of indebtedness and austerity.
The Covid-19 pandemic came to worsen the situation: a negative growth rate of -8.6% in 2020, a record budget deficit of 10% of GDP from the first year of the crisis, and a tripling of the cost of subsidies following the Russian invasion of Ukraine. These subsidies reached 12 billion dinars in 2022, or 8.6% of GDP, at the very moment when Tunisia had to face record deadlines for repayment of external debt.
Indeed, external debt servicing went from an annual average of 3.5 billion dinars between 2011 and 2020 to 7.7 billion in 2021, 6 billion in 2022, and up to 8.7 billion in 2023. That same year, public debt reached 83% of GDP, its highest level in the country’s recent history. It was also in 2023 that Tunisia marked a break with the International Monetary Fund, by officially rejecting, on April 6, the 1.9 billion dollar program which had been the subject of a staff level agreement on October 15, 2022.
The freeze on recruitment and salaries in the public service, as well as the complete elimination of price subsidies, were part of the austerity recipe of this program, justified primarily by the need to restore budgetary indicators.
The decision to reject the program by Tunisia had opened an unprecedented precedent where the country was able to restore budgetary indicators to levels equivalent to those assigned by the IMF program, but by taking things from the other end, namely an increase in tax revenues and greater recourse to domestic borrowing. Even though this allowed Tunisia to avoid an austerity cure of unheard-of social violence, it remains limited. The mobilization of internal resources remains fragmented, often constrained, tax progressivity was rather timidly undertaken, and the Tunisian response struggles to fit into a genuine long-term economic strategy. Tunisia said no to an IMF program, without however freeing itself from the paradigm that underlies it.
This implies for Tunisia a double imperative: to stimulate the national economy through public investment and to guarantee its financing by a fairer taxation, notably with regard to the wealthiest.
Tunisia must offer itself its “Keynesian moment”
Tunisia must live its “Keynesian moment.” It is a question of breaking with economic austerity and abandoning its posture of neutrality inherited from the structural adjustment plan, which had locked it into a neoliberal logic where the market decides everything. This rupture is all the more necessary since, in the post-Covid crisis, the richest countries were able to fully reinvest Keynesian tools to revive their economies. This approach remains largely absent from Tunisian public policies. Public investment is progressing in small steps and remains marginal, going from 4.7 billion in 2023 to 5.2 billion in 2024. In 2025, it is expected to reach 5.4 billion, or barely 2.9% of GDP. It is therefore at this precise level that it is necessary to break, not to offer a simple economic reprieve that would only postpone the return of the neoliberal model, but to aim for strategic objectives. This concerns in particular strengthening food and energy sovereignty, essential levers for the Tunisian economy. Agriculture, still conceived within the framework of food security, currently perpetuates the country’s dependence on the market and on the needs of Northern countries. The State must reappropriate the long-term horizon and reconnect with a logic of planning, offering economic actors clear visibility and enabling the pursuit of ambitious objectives centered on the needs of the population.
If the prospects of food and energy sovereignty undoubtedly involve a reconquest of monetary sovereignty for their financing, the taxation of the rich appears as an unavoidable solution in the short and medium term.
For tax justice in the service of the common good
In this field as well, the structural adjustment plan constituted a turning point in Tunisian tax policies. The progressivity of the income tax was emptied of its meaning, the taxation of corporate profits drastically reduced, wealth taxation marginalized, customs duties dismantled, while recourse to regressive taxes on consumption was largely accentuated. Since the refusal of the IMF program, Tunisian governments have only timidly modified this trend. The income tax scale has been reinforced with three new brackets, the top marginal rate raised from 35% to 40%, the general corporate tax rate increased from 15% to 20%, and the specific rate applicable to banks, insurance, and financial institutions raised from 35% to 40%. A tax on real estate wealth was also instituted, alongside other measures, circumstantial or permanent, targeting certain categories of taxpayers. These reforms have contributed to gradually reducing the gap between direct and indirect taxes, from 18.8% in 2022 to 14.4% in 2025, while still leaving considerable room to establish a genuine progressive tax policy.
This room can be filled by the following measures:
- restore genuine progressivity of income tax, so that high incomes contribute according to their capacity;
- align the taxation of capital with that of labor, in order to reduce the inequalities increased by the preferential treatment of dividends and financial income;
- strengthen the wealth tax by including financial assets, with a more realistic threshold of liability and a differentiated scale;
- reduce costly and ineffective tax loopholes, which deprive the State of several billion dinars while benefiting the most powerful actors;
- effectively fight against tax evasion and fraud, by strengthening the means of the administration and the judicial system.
These reforms do not fall under a simple technical adjustment. They constitute a true change of paradigm: moving from a logic of tax competitiveness, which has eroded the redistributive capacity of the State, to a logic of tax justice. It is this shift that will make it possible to finance an inclusive recovery and to restore citizens’ trust in taxation as a tool of national solidarity.
